The ecommerce major revamps its seller commissions, increases logistics fee structures in a move aimed at cutting subsidies and improving business margins.

BENGALURU: Amazon India has revamped seller commissions across half of its product categories, in a move aimed at cutting subsidies, improving business margins and rationalising costs, while continuing to give incentives for highgrowth categories.

Although the new incentive structure is likely to face backlash from some sellers, industry observers say it is in line with steps taken by the ecommerce company to control cash burn and reduce incentives it once gave sellers to scale up the business.

“Business is not constant, business structure changes, margins change and keeping inflation into account while taking seller feedback, we are making these changes,” said Gopal Pillai, vice-president, seller services at Amazon India.

Amazon said, effective May 23, it would increase commissions on certain categories including watches, luggage, shoes, beauty products and mobile phones, and cut commissions on home furnishing, sports items, fashion jewellery, handbags and musical instruments, among others. Broadly, the changes range between 0.5% and 2% across categories. Amazon charges a commission of anywhere between 3% and 25%, and this is similar for Walmart-owned Flipkart, its rival at home.

Both the companies have been revisiting seller commissions and cost structures every six months. They have been revising rates based on the categories they want to build, and fill gaps in product selection. Amazon India has over 4.5 lakh sellers offering over 170 million products on its platform. Sellers pay a fixed fee per order, referral fee, and separately incur shipping costs, monthly warehousing fee and pick and pack fee depending on the mode of fulfilment they choose on the marketplace.

HEAVY-DUTY CHANGESAmazon has marginally increased its weight-handling fee for its Fulfillment by Amazon and Easy Ship business, and has raised the cost of listing on its “Lightning deals” page, which is its most visited page giving sellers high exposure.

Amazon said its high volume listing fee of Rs 0.50 per item per month will ensure better visibility on the marketplace.

The company has, however, made some cost deductions in its Easy Ship business and pick and pack fee for standard-size items on its Fulfillment by Amazon offering, and also offered zero fulfilment fee for items over Rs 20,000.

This is a service where a seller stores products in Amazon's fulfillment centres and lets Amazon take care of packing, shipping and customer service.

“We hope to build on this as our sellers progress on the journey of growing their business by selling to millions of customers across India,” Pillai said.

0Comments

Are you a Business Owner? Get Your Free Business Listing on Economic Times.